SouthCrest Financial Group Reports Preliminary 2Q14 Financial Results

PEACHTREE CITY, Ga., July 30, 2014 (GLOBE NEWSWIRE) -- Kenneth H. Maloy, President and CEO of SouthCrest Financial Group, Inc. (OTCBB:SCSG) announced today that the company reported preliminary results for the second quarter of 2014 and the completion of a significant post charter consolidation restructuring.

During the quarter the Company produced a net loss of $939,000, inclusive of $484,000 of restructuring expenses and $221,000 of securities gains. Excluding these one-time items, the net loss would have been $676,000, an improvement from the $958,000 loss in 1Q14. "As part of the final back office consolidation that was completed on July 12^th, we finished our internal restructuring that included the reduction of 10% of our workforce in June and early July which will begin to benefit expense levels in August, and the realignment of our formerly four banks into two divisions, Community and Metro. We have also optimized our benefits package to save approximately 20% of our total benefit cost per year starting in August. Finally, we closed one branch in Chickamauga and the lobby of the downtown Cedartown branch during the past 45 days. When combined with year over year loan growth of 10% and the resulting 14% growth in net interest income, we are now more confident that SouthCrest will produce positive income during the second half of 2014. As we said in our first quarter earnings release, we are fully committed to returning SouthCrest to peer-level profitability through better efficiencies and higher revenues."

The Company's balance sheet improvement continued with $15.7 million of loan growth (24.5% annualized from 1Q14) while core deposits were effectively level with the first quarter. Total deposits fell $4.0 million, or 4% annualized while total assets fell 2% annualized. "We are expecting to maintain high single to low double digit growth during the third quarter. We are also reasonably satisfied with the deposit metrics given the number of disruptions that have occurred in the past six months."

The estimated Tier 1 Leverage ratio at the end of the quarter was 10.80%, down slightly from 10.97% at the end of 1Q14. On a fully converted basis (including the conversion of all Series AAA Preferred and Series C Convertible Preferred equity) TBV/share ended the quarter at $5.73 per share. The current fully converted share count at the end of the quarter is 8.380 million shares. In addition, the company still retains a deferred tax asset valuation allowance that totaled $10.7 million ($1.28/fully converted share).

SouthCrest has a loss sharing agreement, related to the purchase of a small failed bank in 2010, which expires in March, 2015. Based on the current internal analysis and external reviews, SouthCrest's accounting for the indemnification asset should align closely with related income over the remaining life of the loss share agreement which expires in March 2015, and should not cause any one time material impact in the financial reports. The indemnification asset is now down to $3.1 million from $4.6 million at the end of 1Q14.

Asset quality remained effectively flat as the Company continues to work through the last few remaining troubled assets. The non-performing assets/total assets ratio moved from 1.84% to 1.90% while the allowance for loan losses fell to 1.51% of loans.   

SouthCrest Financial Group, Inc. is a $560 million asset bank holding company headquartered in Peachtree City, Georgia. The company operates a 12 branch network throughout Georgia and Alabama through its subsidiary bank, SouthCrest Bank, N.A. The bank provides retail and commercial banking services, mortgage banking, investment management, and online banking services. 

This presentation may contain certain "forward-looking statements" that are subject to risks, uncertainties, and other factors that could cause actual results and shareholder values to differ materially from those projected. Factors that could cause or contribute to such differences include economic conditions, government regulation and legislation, changes in interest rates, credit quality, competition, and other risk factors.